My highlights from Stan Druckenmiller's interview

Stan Druckenmiller is one of the greatest macro traders or investors of our times. Recently a new interview was published at https://thehustle.co/stanley-druckenmiller-q-and-a-trung-phanin

Here are my highlights:

I remember a lot of value managers virtually going out of business in 2000. Julian Robertson threw in the towel and said he couldn’t take it anymore and stopped managing money in the early 2000s. Everything Julian was long, went up many fold and the tech stocks went down a lot. 

Amazon at $3200 is not a bubble stock. Not whatsoever. It’s basically decent value. I don’t just mean Amazon, but a lot of the big FAAMG names.

Biggest Risk:  Without a doubt: inflation strong enough that the Fed responds to it. 

This bubble has gone long enough and it’s extended enough that the minute they start tightening, the equity market should go down a lot. 

Particularly with so much of the cap weighted in growth stocks, which would be hit the worst. 

Don’t confuse a genius with a bull market. [Retail investors could] lose enough money that they’re scarred. 

I like a multi-disciplinary approach. My first boss taught me technical analysis. So, I use fundamental analysis and technical analysis. If there are 1000s of securities out there and my portfolio is only going to have 15-20, I’m never going to buy something that doesn’t have a great chart and fundamentals.

The other thing to me [that makes a good investor] is you have to know how and when to take a loss. I’ve been in business since 1976 as a money manager. 

I’ve never used the stop loss. Not once. It’s the dumbest concept I’ve ever heard. [If a stock goes down 15%] I’m automatically out. But I’ve also never hung onto a security if the reason I bought it has changed. That’s when you need to sell. 

Whether I have a loss or a gain, that stock doesn’t know whether you have a loss or a gain. You know, it is not important. Your ego is not what this is about. What this is about is you’re making money. So, if I have a thesis and it doesn’t bear out — which happens often with me, I’m often wrong — just get out and move on. Because I said earlier: if you’re using the most disciplined approach, you can find something else. There’s no reason to hang on to any security where you don’t have great conviction.

You just have to be disciplined and you’re constantly fighting on emotions. It doesn’t make any sense, but when a security goes up, every bone in your body wants to buy more of it. And when it goes down, you’re fighting and making yourself not sell it. It’s just the nature of the beast. And you cannot get crazy when it’s going up.